Hedge funds manipulate stock prices, new research shows

December 10, 2012

(Phys.org)—Some hedge funds manipulate stock prices at the end of the month to improve the returns that they report to their investors, a new study suggests.

In a study of 10 years of hedge fund data, researchers found evidence that some funds run up prices on specific stocks they hold on the last day of the month and quarter – especially the last 20 minutes of trading – before they report their returns for the period. But the prices usually fall back the next day, after the abnormally large returns have already been reported to investors.

"Some hedge funds that do this are trying to make themselves look more successful than they really are," said Itzhak Ben-David, an author of the study and assistant professor of finance at Ohio State University's Fisher College of Business.

"What this means is that investors could be getting the wrong messages about the quality of the hedge fund. They're not getting a clear picture of how the fund is doing."

This practice, called "portfolio pumping," is economically significant, Ben-David said. The study found that stocks that have the most hedge fund ownership (in the top 25 percent) see on average an abnormal return of 0.30 percent on the last day of the quarter, most of which reverts back the very next day of trading.

Ben-David conducted the study with Francesco Franzoni of the University of Lugano and the Swiss Finance Institute, Augustin Landier of the Toulouse School of Economics and Rabih Moussawi of The Wharton School of the University of Pennsylvania.

In the past, some mutual funds used to engage in portfolio pumping until the Securities and Exchange Commission cracked down on the practice in 2001. But this research suggests that hedge funds haven't been turned off to the practice.

"This is a legal gray area. I think if a hedge fund were to be seen doing this systematically, the SEC would be interested in investigating," Ben-David said.

The dataset used in this study combined a list of hedge fund management companies, mandatory institutional quarterly portfolio holdings reports and information about hedge fund characteristics and performance from 2000 to 2010.

Ben-David said he and his colleagues found evidence of very large stock orders on the last trading days of a month and quarter – orders that were big enough to move the stock prices.

The orders came in not just on the last day, but in the last minutes of the day.

"About half of the average increase in the prices of stocks that are owned by hedge funds takes place in the last 20 minutes of trading," he said.

But these aren't meaningful gains for investors, because most of it reverts back to the original price within the first 10 minutes of trading on the next day.

Not all or even most hedge funds probably participate in this portfolio pumping, Ben-David said. The researchers found evidence that hedge funds that pumped their portfolio in one quarter were more likely to do it again the next quarter.

They also found that hedge funds were more likely to pump their portfolio when they could get more "bang for the buck," he said.

For example, hedge funds were more likely to engage in the practice if they held more than an average number of illiquid stocks, or stocks that aren't heavily traded. That means a hedge fund would not have to spend a lot of money – less than $500,000 – to make a measureable impact on the value of the stock.

Findings showed hedge funds were more likely to engage in stock price manipulation when they had more to gain – especially those funds that were doing particularly well or particularly poorly against competing funds in a specific time period.

"Investors always hear most about the top 10 funds, so fund managers all want to appear in that list. That gives a strong incentive to hedge funds to manipulate when they are near the top," he said.

The researchers also found evidence that hedge funds used portfolio pumping when their returns were near zero for a month or quarter.

"If a hedge fund is just running slightly negative, they can pump up their stock prices to push themselves over into positive territory," Ben-David said. "Positive is always better than negative when you're presenting your results to investors."

That's one reason why there are many more hedge funds with returns slightly above zero than slightly below, he said.

Hedge funds in the middle of the pack are probably least likely to manipulate prices because they have little to gain. Any increase in their fund value is not likely to change perceptions about their performance.

While portfolio pumping hurts investors, e.g., by relying on misstated returns and risk, it can benefit the hedge fund managers whose compensation is tied to end-of-month performance. It can also help companies whose stock prices rise at the end of reporting periods, as some financial contracts may rely on end-of-month stock prices – even if they fall right back the next day.

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106 comments

So what is the article implying? We need more micromanaging regulations on finance? I thought the Dodd Frank bill was suppose to fix everything. Besides, isn't this subject a little off topic for Physorg?

There is always a question, whether the "free market" means "free information sharing" between competitive subjects. It's like the playing a chess, when you're forced to announce all your intentions to your rivals in advance for the sake of transparency of your decisions. The decision which hiding of information is harmful not only for the competitors but for the market as a whole is often arbitrary and it introduces a socialisticaly technocratic style into control of market. There is another question, if the market should serve as an evolutionary environment for businessmen only, but not for their customers too (it slows down the evolution of market as a whole).

In AWT the "ideally free" market can exist only under "ideally strict" governmental control, which leads into shift of day of tax pay freedom into middle of year - we will need a governmental officer for every businessman, who would guard the purity of the business.

Note that the shareholders of the large hedge funds are their customers too - the line between businessmen and their customers is pretty blurred at the large financial scale in the same way, like the difference between matter and energy in vacuum at the scale of black holes or like between surface and underwater waves at the water surface at the largest distances.

The ideals of laisses-faire proponents of 19th century, in which the free market should protect its customers at every price therefore have rather fuzzy boundaries of their appliance here: at the case of most gigantic financial groups we cannot protect some group of customers without unwanted discrimination of another group of businessman and vice-versa.

The only way you ever stop massive amounts of fraud in the stock market, which is itself a layer cake of various rackets ensconced within one another, is by shutting down the entire stock market.

It's rather the question of finding the effective measure and scale of this market. Or it could become as dissipative and wasteful of resources, as the socialistic planning system. Not to say, it's prone to instabilities naturally, which leads to periodic economical crisis. This instability deepens with speed and volume of transactions, as maintained with contemporary computerized broker systems. Every system has its natural limit in its usefulness and effectiveness - above it it becomes a brake of the further evolution. The financial market, i.e. the market with money shouldn't become more significant, than the market on which it's actually based, i.e. market with goods. The financial market should serve the (redistribution of resources of) commodity market - not vice-versa.

In AWT the small fluctuations are forming larger ones and so on. But when the number of nested levels will exceed the certain limit, then the large level fluctuations cannot follow the density fluctuations at small levels and they're become effectively independent on them. Analogously, when the level of integration of monetary products exceeds certain limit, then their market cannot follow the needs of underlying small businessmen. We developed high level financial derivatives for increasing of the effectiveness of monetary flow in an effort to suit exactly the particular needs of their customers. But when such level becomes too high, then the customers cannot utilize their potential effectively - such a derivatives are become rather the tool for speculators and arbitrager.

In similar way the large scientific projects of recent era are serving the scientists itself, rather than the rest of society - which is actually paying it all. And I'm not talking about political projects.

Fools and their money are soon parted. No one is forced to invest in a hedge fund

I can say easily, if the layman would follow all recent findings, they could control the effectiveness of scientific research more effectively, than the experts itself (who are often limited in general knowledge with their deep specialization).

The problem of this down-level approach, it just needs a time, a lotta time. The laymans are specialized and trained in making the money for life of experts, not for their decisions. From this reason the laymans who value their time transfer their decisions to specialized group of experts (brokers), thus losing the immediate control over the future of their investments. It's not about stupidity, but about lack of time. Or we could say, the molecules in droplet are too stupid, if they don't participate on motion of droplet directly. These molecules have no time for it.

Get govts out of the business of creating money and you will have your wish

The lassies-faire idea, that the people will do their business honestly and dutifully is the same utopia like the communists belief, that the same people will work for their pleasure and they will redistribute the products honestly. Not quite surprisingly both utopias emerged in the same time.

It's the nonsense, because the people are selfish creatures by their very nature, who are cooperating only when it's advantageous for them and they will therefore always attempt for cheating of the system from one side or from another. The first step in creation of ideal society for people is in forgetting all ideals about people. It just doesn't work.

Get govts out of the business of creating money and you will have your wish. Many fools trusted Bernie Madoff because he had been vetted by the govt and was delivering great returns..

The governmental interventions can be as dangerous for free market, as the lack of them. The trick is in their balance, not categorical dismissal. But as I already said, above certain level of integration the high level decisions become separated from their underlying motivations and nothing can help such a overgrown system - it must be broken into smaller parts. In Nature such spontaneous symmetry breaking happens all the time during condensation and crystallization. If the molecules have no energy and time to maintain the effective motion/energy transfer within the whole massive body, they separate it into smaller groups.

The lassies-faire idea, that the people will do their business honestly and dutifully is the same utopia

No such assumption is made in laissez-faire. The exact opposite is what is assumed in LF. What is assumed is people will respond to what is THEIR self interest. Fool me once shame on you, fool me twice shame on me prevails in LF.Assuming there is no force used to plunder either by individuals or govts, honest trade will prevail because it must, or trade will cease. No Utopia, vested self-interest.

The lassies-faire idea, that the people will do their business honestly and dutifully is the same utopia

No such assumption is made in laissez-faire. The exact opposite is what is assumed in LF. What is assumed is people will respond to what is THEIR self interest. Fool me once shame on you, fool me twice shame on me prevails in LF.Assuming there is no force used to plunder either by individuals or govts, honest trade will prevail because it must, or trade will cease. No Utopia, vested self-interest.

Are you saying as long as no force is used everything else is okay? What about deception, burglary, trickery, Ponsi Schemes, etc..

It is pretty obvious you do not have much money to worry about protecting because you are very naive.

No.Fool me once, shame on you, fool be twice shame on me.Theft by deception, fraud, is still theft and law should be used to recover damages. Even more effective is word of mouth advertising regarding such deception.Madof was enabled by the SEC for failing to investigate when notified.

It is pretty obvious you do not have much money to worry about protecting because you are very naive.

If no one trusts the hedge funds, they won't stay in business for very long. Usually the naive don't keep their money very long.

Rygg2, nice to see you blame the SEC's failure to catch the Madoff Ponzi Scheme, you are right too. By blaming the SEC though you are also admitting we actually do need a governmental agency to police financial markets.

You are still incredibly naive to believe we could have a functioning financial system based of a business' reputation. Many world class businesses have turned out to be frauds, Enron and WorldCom to name a few. Without governmental oversight and regulations we would have many more business failures and frauds.

Personally I am not knowledgeable enough to protect myself from all the possible scams and just plain business failures out there. I like having a government that helps me with that task, its a bargain!

Without governmental oversight we would still be using a barter system with pawn shops and driving around in horse and buggies.

I thought the Dodd Frank bill was suppose to fix everything. Besides, isn't this subject a little off topic for Physorg?

Dodd Frank is a foil attacking bystanders while the banksters sold junk loans twice: once to AIG insurance in turn onto the taxpayer, and another to poor foreigners who trusted the AAA rating Moodys gave these garbage loans.

Get govts out of the business of creating money and you will have your wish.

Many world class businesses have turned out to be frauds, Enron and WorldCom to name a few. Without governmental oversight and regulations we would have many more business failures and frauds.

These businesses were enabled by the failure of the govt to do its job. Assuming the govt WAS doing its job, investors assumed all was well and....all was not well.And part of the problem with Enron was its close ties to Clinton and Kyoto and other prominent politicians.

Many world class businesses have turned out to be frauds, Enron and WorldCom to name a few. Without governmental oversight and regulations we would have many more business failures and frauds.

These and many others were ENABLED by the FAILURE of the govt to regulate. In 1997 Wachovia securitized mortgages with the implied guarantee of govt backed agents Freddie and Fannie.Enron was a 'friend of Bill' and supporter of the Kyoto treaty.And don't forget all the recent Obama businesses that failed. Where was the govt?

we actually do need a governmental agency to police financial markets.

Ever since the creation of the Federal Reserve by the US govt, the govt owns the finance markets and as such have an obligation to police such markets.With free market money, the only obligation the govt would have is to protect private property by prosecuting theft and fraud.But then the 'progressive' socialists couldn't control the money or the economy.

"When warlords started printing and importing forged currency from abroad, the most widely accepted notes were those that most resembled the pre-1991 ones. Furthermore, denominations higher than the existing were rejected. From an economic point of view, the So.Sh "degenerates into a pure commodity money", Mubarak argues. He estimates that the production cost of printing and importing one unit of forged So.Sh was US$0.03 in mid-1990s. In 1997, the So.Sh1,000 note, the highest denomination, was exchanged for US$0.12. However, in late 2001 the exchange rate dropped to US$0.04: producing So.Sh500 notes became counterproductive, and printing So.Sh1,000 notes was no longer more profitable than other enterprises."http://thinkafric...currency

You're confusing assets with money. Assets can be bartered but only government-issued money can be a SUBSTITUTE for assets. Though the "government" can now be a computer program but that's cutting-edge

If you barter with Au or Ag, are they money?

No, because they reflect the spot value of a commodity. Currency reflects the spot value of a government.

Govt is not needed to create money nor is it needed to verify or standardize its value.A good govt can help facilitate the use of money by keeping its value stable and bad govt can destabilize its value destroying and economy.But if commodities like gold or silver are used for money, the only standardization needed is purity and weight and govt is not required for that.And there is not even a need for money to physically exist at all, even thousands of year ago if someone could keep good records and document transactions. The only issue would be determining the unit of exchange.

Again you conflate assets with money. They are not synonymous. Moreover gold was not freely tradable as theft and robbery was common on the mud trails between cities. Thus Mayer Rothschild offered gold vaults. Soon afterward he learned he could lie about the amount of gold in his vaults and control the price of gold. Gold is not a practical form of money because nobody knows the true supply. Gold mines are discovered in Mongolia forcing the price down.

"As a result I am more convinced than ever that if we ever again are going to have a decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which it can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject. It is a business which competing enterprise can maintain only if it gives the public as good a money as anybody else. "http://mises.org/daily/3204

This happens to some degree today with govt money exchange rates but individual countries still have the monopoly to control its value within their borders.

Moreover gold was not freely tradable as theft and robbery was common on the mud trails between cities

If gold wasn't freely tradable why would anyone want to steal it?

How does the quantity of gold prevent its use as money? There is an infinite supply of fiat currency so how does inflation affect its value? Gold has an intrinsic value in its production costs, just as a counterfeit Somali note has. Gold is difficult to destroy, though.

Rygg2: Precious metals are NOT money, trading precious metals is bartering. It was not until governments established uniform metal coins that money can into existance.

Who needs the government to print money? You do! There is not enough precious metals in the world to replace paper money and money accounts backed by paper money, TRUST!! If all money was precious metals or gems, it would soon disappear, worn to dust by just changing hands. Multi trillions of dollars change hand every day in todays world economy. Millions of people would be needed just to transport these precious metals from one place to another. Our living standard would plummet, people would be starving and dying from plagues because the precious metals could not be transported fast enough from one place to another

Botton line, it boils down to TRUST whether it is paper money or precious metals. The difference, precious metals take time to change hands, paper money changes hands with today's computers in seconds

You do double talk Rygg2. You say all the government should do is keep the value of money stable, well tell me exactly how they are to do that unless they have the power to create and destroy it in the first place?

Govt is not needed to create money nor is it needed to verify or standardize its value.A good govt can help facilitate the use of money by keeping its value stable and bad govt can destabilize its value destroying and economy.But if commodities like gold or silver are used for money, the only standardization needed is purity and weight and govt is not required for that.And there is not even a need for money to physically exist at all, even thousands of year ago if someone could keep good records and document transactions. The only issue would be determining the unit of exchange.

Ah, so even you admit it boils down to TRUST. If that is true what is the difference between paper money and precious metals?

Let's put it this way, I would much rather have and ELECTED government secure the value of money than a mob of greedy capitalist. You can go on trusting the mob if you want, it is not for me.

You say all the government should do is keep the value of money stable,

ONLY if the govt CONTROLS the money, which it does NOW.

It was not until governments established uniform metal coins that money can into existance.

B$!Money is whatever people will accept AS money.Nearly ever govt devalued its money, even if it was gold, silver, bronze, etc.

If that is true what is the difference between paper money and precious metals?

Of course it comes down to trust. It is quite easy to trust a gold coin by weight and density. Paper money only if you trust the govt AND how easily it can be exchanged. I have several Saudi Riyals few would take in the US, but if I had Saudi gold coins, they would be easily convertible to any local currency, or could be used for money directly, so why not use grams of gold or silver or ... for money. Because govts can't control it.

precious metals take time to change hands, paper money changes hands with today's computers in seconds

Why to govts keep gold in reserve?

e-gold exchanges hands very quickly, too.

These days, I could stop by a Wal Mart, give them dollars and they give me a VISA card I use as money. There is no reason, except by US law, I couldn't trade gold, silver or whatever, for the same card and spend it electronically, too.BTW, for you 'progressives' who assert the Federal Reserve is a private entity, how can they control the money IF ONLY govts can control the money?

Money is whatever people will accept AS money.Nearly ever govt devalued its money, even if it was gold, silver, bronze, etc.

Try making your own money ryggie and see how much time passes before the FED zionists knock on your door. I know you like them so it should be no problem.

BTW, for you 'progressives' who assert the Federal Reserve is a private entity, how can they control the money IF ONLY govts can control the money?

With grassy knolls and single bullet theories and your neoconservative, zionist circle-jerk

-koch

Gold and silver increases in value when the value of paper money falls, simply b/c gold and silver are "commodities" that can't depreciate very much. An ounce of gold, e.g., can never fall in value as paper money often does, sometimes to zero worth.In Germany during and after WW2, even a wheelbarrow full of Deutschmarks wasn't enough to buy a loaf of bread. People ate the leather off their shoes.

But those who had their gold hidden were able to use it to buy food, and even to escape to another country that was neutral. The Jews escaped to Israel from Germany and Poland by paying for their passage with gold, except when they were found to be carrying it and it was often stolen from them.Paper money was worthless, but gold seldom loses b/c it is the best commodity to back paper money.Right now, in the U.S., I believe that gold is no longer the standard to back the value of paper money. That's why the gov't prints money at will when more is needed to circulate, but with nothing to back its value. Inflation is always a possibility when more money is printed with nothing to back it up.

Fraud in the financial markets? Who'da thunkit? Wish the researchers had not wasted their time, and investigated instead something that actually matters -- energy pricing. Then perhaps we could have learned how it was that the price of oil remained high after 2008 even as demand began sinking and supplies began rising. Then, after discovering how futures markets can be used to leverage prices, the academics could move on to the manipulation of precious metals prices. (And yes, what does any of this have to do with PhysOrg?)

The other side of the coin with govt money is when there is plenty of money but nothing to buy.In Leningrad in '83 Levi's jeans were going for 100 rubles with the official exchange rate of $1.5/ruble. Of course a tourist couldn't sell their jeans and expect to turn those rubles to $$ at the border.What good is money if there is nothing to purchase?

Also, in the Berkshires in MA are printing their own local currency called Berkshire bucks.

Fraud in the financial markets? Who'da thunkit? Wish the researchers had not wasted their time, and investigated instead something that actually matters -- energy pricing. Then perhaps we could have learned how it was that the price of oil remained high after 2008 even as demand began sinking and supplies began rising. Then, after discovering how futures markets can be used to leverage prices, the academics could move on to the manipulation of precious metals prices. (And yes, what does any of this have to do with PhysOrg?)

I actually like it that Physorg publishes a large varity of articles.

The world oil markets are not competitive anymore since the major oil companies have been allowed to merge in the late 90's. That is one reason the price never drops anymore. There are other reason like drilling deeper well in deeper water and fracking. Fracking is expensive.

Sure any thing can be used as money Rygg2. For example, my neighbor and I trade a car for a load of gravel for his driveway. Just because one can use anything as money does not make it money, that is bartering. Money can change hands repeatedly many times a day. It is not so easy to do that with cars or especially gravel in one's driveway.

The velocity of money flowing throughout the economy is a major factor in our increasing standard of living, and that needs TRUST. Thanks you Mr. Computer.

Rygg2, so you think the government should not be in charge and control the currency in its own country? Well this may be news to you but no other entity could do a better job. The proof, well it goes back to the survival of the fittest. Sure governments make mistakes and ruin the value of its own currency at times.

Your problem is looking for absolutes, those are few and far between and they have nothing in common with human beings.

o you think the government should not be in charge and control the currency in its own country?

Why should it?There are many countries that do not have their own currency and don't control it. They seem to be doing just fine.Ultimately it's the citizens who get screwed because the temptation to inflate the currency is too great and the citizens pay this hidden tax.

Sure governments make mistakes and ruin the value of its own currency at times.

What's worse is when a country like Switzerland has a strong, stable currency and gets screwed by those who inflate and have weak currency.Inflation only benefits the state and screws the citizens so why should the state be in charge of the money?

The reason a state should control its own money is because it has more control over its own destiny.

And the countries that do not have their own currencies rely on and are at the mercy of other countries' currencies.

Your final misconception is referring to the "state" as some abstract third party. Who do you think the "state" is? It is the sum of its citizens and the land they occupies. And whether in a democracy or a dictatorship the state does what it thinks will secure its future best. True, the states often make mistakes, but that is human.

Recent history in the US is an example of that, when we should have been running budget surpluses during the good years instead we squandered the money on useless wars and tax cuts.

"The key to getting better monetary policy is not to merely limit thediscretion ofthe government but to get the government out ofthemoney business altogether by privatizing the Fed.""Consumers would choose between U.S. dollars, euros, Citi dollars,GE dollars, etc. This choice would be based on confidence in the issuer and how well the product serves the consumer's needs. Companies would issue money solely as a means to profit. Produce too much money and it becomes worthless, too little and not enoughpeople will be able to use your money for you to profit."TOWARD FREE-MARKET MONEYRobert Gelfond

""With Japan massively intervening in the (currency) market and the Swiss effectively curbing the safe-haven status of the Swiss franc today, we only really have gold as the last-standing safe-haven currency around," David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto, wrote in his daily note. "While the US dollar has liquidity, it unfortunately has a debt burden alongside it that gold does not." "

How much control does a nation have over its currency?Remember the Asian contagion?

"The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support its fixed exchange rate), cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial overextension that was in part real estate driven. "

"Many economists believe that the Asian crisis was created not by market psychology or technology, but by policies that distorted incentives within the lender–borrower relationship. The resulting large quantities of credit that became available generated a highly leveraged economic climate, and pushed up asset prices to an unsustainable level.[12] These asset prices eventually began to collapse, causing individuals and companies to default on debt obligations.""The foreign ministers of the 10 ASEAN countries believed that the well co-ordinated manipulation of their currencies was a deliberate attempt to destabilize the ASEAN economies. Former Malaysian Prime Minister Mahathir Mohamad accused George Soros of ruining Malaysia's economy with "massive currency speculation." (Soros claims to have been a buyer of the ringgit during its fall, having sold it short in 1997.)http://en.wikiped...l_crisisThis is why Soros is a socialist, profit.

"However, interestingly enough, such nations as Brazil, Russia, and India as well as most of East Asia began copying the Japanese model of weakening their currencies, restructuring their economies so as to create a current account surplus to build large foreign currency reserves. This has led to an ever increasing funding for US treasury bonds, allowing or aiding housing (in 2001–2005) and stock asset bubbles (in 1996–2000) to develop in the United States."http://en.wikiped...l_crisisWho benefits from govt control over the money?

Why do you think countries try to weaken their currencies? It is for a trading advantage to increase their exports and reduce their imports. This creates jobs inside their country. This something the US hasn't caught on to yet, we have running a trade deficit for the last 35 years. That is the real reason unemployment is high and worker wages have been unable to keep up with inflation.

Who benefits when the government controls the money supply, most of the times everybody does but on rare occasions many get wiped out. Hey, it is the best system yet, could it be replaced with something better, maybe. But certainly not by private "money" creators. That would be just as ill conceived as replacing the laws of a civilization with "the law of the jungle". That is a monetary system made for hucksters and charlatens. They would be in their heyday, at your expense. So, you get wise to them, they would just start all over again under a new name and prettier money.

Based upon what?The US economy was doing quite well without the Federal Reserve.After the Federal Reserve the US entered into WWI, WWII, Cold War, Korean War, the Depression, all traceable to US economics policies.Recent booms and busts include S&L in the 80s, the stock market in 87 and late nineties, housing bubble and now unlimited national debt. This is the best?

Your idea about creating private currency is already practiced in the US, so what are you complaining about? If it was such a great idea wouldn't it replace the money issued by the Federal Reserve in short order? After all one could even back their private money with a gold reserve if they wanted to, rock solid you know! Ah, but none are. It is back to the who do you TRUST the most.

Oh, I see why you are unhappy it has not been able to replace the Old Greenback. Back to "the survival of the fittest" again. Isn't that what your basic thesis is all about? Hey, start your own private currency and run the dreaded Federal Reserve out of business. Maybe you could enlist the help of Ron Paul.

The Secret Service is assigned the task of eliminating alternative currencies for the zionists. Retired surfer Bernard von NotHaus is at risk of 45 years of prison for openly selling Liberty Dollars not sanctioned by the zionists

From Wiki: Von NotHaus was labeled as a domestic terrorist by the United States Federal Bureau of Investigation in 2011.[3]

According to the evidence introduced during his 2011 federal criminal trial in connection with his involvement with the Liberty Dollar, von NotHaus was the founder of an organization called the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code, commonly known as NORFED and also known as Liberty Services. The FBI claimed that NORFED's purpose was to mix Liberty Dollars into the current money of the United States and that NORFED intended for the Liberty Dollar to be used as current money in order to limit reliance on, and to compete with, United States currency.

For one thing Rygg2, the economy is about 100 times more complex than it was 100 years ago. And as for wars, I don't think they can be blamed solely on our monetary system. If private currencies dominated the country we would probably be having wars between city-states.

The 19th century had more boom bust cycles than the 20th century with a very small economic system. Why would you want to go backwards. Oh, I forgot you long to go back to the cowboy and indian days.

"As things stand, the American people can look forward to more years of economic stagnation, as well more years of pretending that there is a light at the end of the tunnel. Don't worry if your kids graduate from college, only to move back home and play video games in the basement. It's just the new normal."http://www.realcl...035.html

"As things stand, the American people can look forward to more years of economic stagnation, as well more years of pretending that there is a light at the end of the tunnel. Don't worry if your kids graduate from college, only to move back home and play video games in the basement. It's just the new normal."http://www.realcl...035.html

The current regime is doing great job of printing money.

You can blame 35 years of trade deficits for that. We keep shipping money out to pay for the trade deficits and then we need to run internal deficits to feed and house the people without jobs because we are importing the things they should be making here. It is a lose lose for the US and that started long before Obama became President. Of course if I remember right you think the trade deficits are great for America, don't you?

"inflation is not about general rises in prices but about increases in money "out of thin air." Inflation is an act of embezzlement. On a gold standard, inflation is about the increase in receipts unbacked by gold money. On a paper standard, inflation is about an increase in the supply of paper money. The general increase in prices, as a rule, develops on account of the increase in money. The harm that most people attribute to rises in prices is in fact due to increases in the money supply out of thin air."http://mises.org/...n-PricesThis is exactly what is happening now. Wealth creation around the world in dropping while printing money is rising. It won't be long before the world is like the USSR, everyone will have money to burn and nothing to buy. Burning the money will at least have some utility.

"So while the trade balance doesn't cause the currency rate of exchange, it does provide an indication of the extent of monetary abuses by the central bank. In short, it provides an indication regarding the diversion of foreigners' real savings to the country that is engaged in reckless monetary policy."http://mises.org/daily/1233

Mild inflation benefits poorly run businesses (by increasing apparent revenues and profits), and thus preserves jobs of citizens. Ultimately, inflation doesn't matter, so long as it is gradual: Wages rise, asset prices rise, commodity prices rise -- it's a wash for everyone except the folks who put paper money, or the faux metal coins we use today, under the mattress. As stated above, there are no absolutes -- not in finance, not in politics, not in physics, not in climatology. Everything changes. Those who can't get with the flow wind up on the rocks.

"A country with a trade surplus simply saves by investing more in foreign rather than in domestic assets: it sells more goods and services abroad than it imports from the rest of the world, and uses the proceeds for investing abroad (in bonds, stocks and real investment in such areas as machinery). Likewise, a country showing a trade deficit receives more money from abroad than it is itself saving abroad."http://mises.org/daily/1955/

"A Chinese group agreed to buy 80.1 percent of American International Group Inc. (AIG)'s plane-leasing unit for $4.23 billion in the nation's largest acquisition of a U.S. company. "http://www.bloomb...ion.html

"The U.S. Treasury's sale of its remaining stake in American International Group Inc (AIG.N) will leave taxpayers with a profit of nearly $23 billion - more than the next three most successful bailouts combined."Where is our share of the profit?

It doesn't matter what you "refer to" because it's wrong. Hyperinflation, a la "a wheelbarrow full of Deutschmarks wasn't enough to buy a loaf of bread," happened between the world wars.

How the hell do you think Hitler came to power? People have to be pretty damn despondent to support that.

Also, you're stupid.

-CrankHerbert

No...it's evident that you are too stupid to understand that people were also starving BECAUSE of WW2 and the bombed out cities. Hitler started the war, remember? Allied bombs destroyed German cities like Dresden, remember? Do you really think that bakeries stayed open and business as usual through all the bombs falling and the aftermath? You need to read some WW2 books before you criticize ME, dumbo

"A country with a trade surplus simply saves by investing more in foreign rather than in domestic assets: it sells more goods and services abroad than it imports from the rest of the world, and uses the proceeds for investing abroad (in bonds, stocks and real investment in such areas as machinery). Likewise, a country showing a trade deficit receives more money from abroad than it is itself saving abroad."http://mises.org/daily/1955/

You are starting to catch on Rygg2. Now just ask yourself in which position would you rather be in, saving money abroad and sitting back living off someone else's labor or borrowing money from abroad to pay for your trade deficits and working for them in the future to pay that money back plus interest ? ?

"The U.S. Treasury's sale of its remaining stake in American International Group Inc (AIG.N) will leave taxpayers with a profit of nearly $23 billion - more than the next three most successful bailouts combined."Where is our share of the profit?

We will be using this money to house and feed the unemployed who lost their jobs because of 35 years of trade deficits. The sad things is it is not even a fraction the money needed to pay for the internal damage years of trade deficits have cost the US. These trade deficits even have an affect on the solvency of Medicare and SS.

"A Chinese group agreed to buy 80.1 percent of American International Group Inc. (AIG)'s plane-leasing unit for $4.23 billion in the nation's largest acquisition of a U.S. company. "http://www.bloomb...ion.html

Yup, you'll be working for them to pay back the junk you bought for your children for Christmases of yesteryear.

The bottom line, every country needs to PRODUCE as much as they CONSUME in goods and services. That is basic problem in Greece and the US, both countries have consumed more than they have produce for decades. Sorry, but payback is here. Period.

P, trade deficits don't matter.Chinese can't eat $$, neither can Saudis.The money we spend on the stuff they make MUST return to the USA in one way or another.In the 80s, Japanese flush with $$ bought US assets. To whom did those $$ go? Same with Chinese. They buy US debt, they buy US businesses with $$. To whom does those $$ go?Japanese, German and Korean companies have opened factories in the US to build their cars for the US and export markets. Capital follows productivity. Greece, Spain, France,CA and other socialist sates impose excessive regulations and taxes lowering productivity.What we see in Greece is like the bears in Yellowstone Park. Why work if someone will feed you? Same thing is happening in the US and its a deliberate attempt by the socialist Obama to install Marxism.

You are missing a couple of important points Rgyy2. Sure you cannot eat the $$ but you can make someone else grow the food for you with those $$'s.

Second point, once you buy or loan your dollars you earned from your trade surpluses, you earn either interest or dividends which raises the standard of living in the country running the trade surplus. It lowers the standard of living by an equal amount in the country running the trade deficit. To offset that you have to run internal deficits or print more money. But these fixes are just temporary.

Third point, what do you suggest we do with the people who jobs were tranferred overseas because of the trade deficits, transfer them into "Hovervilles"? Let them starve? Or feed and house them like the bears in Yellowstone Park?

You see when a country runs trade deficits for generations like the US and Greece you have little choice but feed them for generations. We like Greece are reaping what these trade deficits have sown.

What do you think made Great Britain such a world power for centuries? It was more than their navy, it was their trade surpluses. They started losing their world power status when they started living beyond their means, producing less then what the were consuming. The US is facing the same future. China knows it, that is why they insisted on trade agreements that gave them the advantage, trade surpluses. Japan had but lost their trade surpluses, you see where they have been heading? Germany is riding high now, why, because of its trade surpluses.

You see there is just no way around PRODUCING and much as you are CONSUMING as a country over a period of years.

Make? The US exports much food around the world that is purchased with $$. Who 'makes' the US grow food for them?

We like Greece are reaping what these trade deficitshave sown.

It's not the fault of trade, it is the fault of inflated currency.

"Mercantilism views the trade deficit as a bad thing because supposedly more money is going out than coming in. But, this view disregards the important concept of the circular flow. A trade surplus means that we are not buying from other countries. In turn their incomes will be lower and they are not able to buy from us. "http://www.radfor...icit.htm

"Our results also indicate that the degree to which government deficit spending helps or harms a country's unemployment rate depends upon the balance of trade. This means that in 2011, if both a country with a 10% trade deficit (analogous to Greece) and a country with a 10% trade surplus (analogous to Norway) were to increase their government budget deficits by 1%, the unemployment rate in the trade deficit country would be made 0.93% worse compared to the unemployment rate in the trade-surplus country.

Of course the real issue is not the goods imbalance it is what is happening to the capital account. Is this being sucked up by govt spending or is it being put to a productive use?Reduce govt spending and its control on the economy and you won't have to worry about the trade 'deficit', P.

Quote Rygg2: "Of course the real issue is not the goods imbalance it is what is happening to the capital account." EXACTLY, so get your information from unbiased sources. Just do a search on US current account balances. Usually the trade balance is the LARGEST figure in the current account balances.

Below is one and it show how dire the position of the US has become.

Excerpt from Wiki:"The current account balance is one of two major measures of the nature of a country's foreign trade (the other being the net capital outflow)."

"Since 1989, the current account deficit of the US has been increasingly large, reaching close to 7% of the GDP in 2006. In 2011, it was the highest deficit in the world"http://en.wikiped..._account

Quote Rygg2: "Of course the real issue is not the goods imbalance it is what is happening to the capital account." EXACTLY, so get your information from unbiased sources. Just do a search on US current account balances. Usually the trade balance is the LARGEST figure in the current account balances.

Below is one and it show how dire the position of the US has become.

Excerpt from Wiki:"The current account balance is one of two major measures of the nature of a country's foreign trade (the other being the net capital outflow)."

"Since 1989, the current account deficit of the US has been increasingly large, reaching close to 7% of the GDP in 2006. In 2011, it was the highest deficit in the world"http://en.wikiped..._account

"The major components of the balance of payments. They include:I. Current account (merchandise trade, services, investment income, transfers)II. Financial account (private, government, and official-reserve changes)The fundamental rule of balance-of-payments accounting is that the sum of all items mustequal zero: I + II = 0."http://www.google...58,d.dmQ"When a country runs a current account deficit, it is building up liabilities to the rest of the world that are financed by flows in the financial account. Eventually, these need to be paid back. Common sense suggests that if a country fritters away its borrowed foreign funds in spending that yields no long-term productive gains, then its ability to repay—its basic solvency—might come into question. "http://www.imf.org

"This suggests that—regardless of why the country has a current account deficit (and even if the deficit reflects desirable underlying trends)—caution is required in running large and persistent deficits, lest the country experience an abrupt and painful reversal of financing.

The US economy is being strangled by the current regime with high taxes and regulation and complete disregard for entitlement obligations.Unleashing the US economy with lower tax RATES, less regulation and creating real trust accounts for Medicare and SS are the only ways to fix it.

Quote Rygg2: "The US economy is being strangled by the current regime with high taxes and regulation and complete disregard for entitlement obligations.Unleashing the US economy with lower tax RATES, less regulation and creating real trust accounts for Medicare and SS are the only ways to fix it."

Taxes are lower today than at anytime in recent memory, so WHERE are the JOBS? In China and Mexico that's where.

As for SS, it has a 2.5 trillion dollar surplus. How much of a drag is this on the economy? NONE it is a PLUS that more than makes up for the drag of Medicare.

Both SS and Medicare would have a much longer solvency projection if we just PRODUCED and much as we CONSUME in this country.

It really boil down to the 35 years and about $10 trillion in accumulated trade deficits. That has a much higher influence on the employment rate than the current account deficit. Both paint a gloomy picture for the future of the US.

"Tax Freedom Day® 2012 arrives on April 17 this year, four days later than last year due to higher federal income and corporate tax collections. "http://taxfoundat...edom-day"The US government currently has unfunded financial commitments of over $61 trillion.

The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security.

Why don't you all go get the Treasury's Comprehensive Annual Financial Report. The US has ample assets as do every other gov't agency. The debt thing is plain an simple accounting fraud.

The US does not do GAAP accounting. They legislate how to do accounting. So what you have are lawyers telling accountants how to do math.

One particular item of interest is how accrued entitlement benefits are accounted for as a CASH PAYMENT TODAY.

Any normal entity would use accrual accounting for a benefit that would be paid out 30 years from now not as a current cash outlay.

There is no fiscal cliff. There is accounting fraud.The purpose being all the money invested in various financial vehicles of the baby boomers is gone and Wall Street is trying to welch on their obligations.

What is assumed is people will respond to what is THEIR self interest.

Which is assuming that people KNOW what is in their self-interest and always follow it. I.E. they're strictly rational, strictly narcistic, and practically omniscient.

Which is why Laisses-Faire doesn't work.

But YOU know what people REALLY want and YOU want to force them to accept YOUR omniscience?BTW, how can people ALWAYS know unless they can make choices and decide that choice was not in their self-interest?Laissez-faire is the ONLY way people can determine what is in their self interest.

"With its evolving networks and patterns of exchange, the free-market economy is perhaps the best-known example of spontaneous order. However, the extensive division of labor common in advanced market economies (and thus often taken for granted) itself rests on another self-organizing and self-perpetuating system. You can find evidence of that system every time you open your wallet."http://www.fee.or...F9EnVZR4(continued)

"As more and more salable commodities become desired for strategic trading purposes, demand for these commodities increases. The process repeats itself until the most salable commodities are almost universally demanded for their exchange value rather than their consumption value. Eventually the process terminates with one commodity (or sometimes a few) serving as the generally accepted medium of exchange. The money economy has been created—not by any social planner or State, but as the result of the behavior of many, many individuals pursuing their own interests. It is the quintessential example of spontaneous order. "

Read more: http://www.fee.or...FDpjFnWPLiberty, free markets and property rights protected by a state, not usurped by a state, are the ways individuals discover what is in their self-interest.

What is perhaps more interesting is the question of why Gasoline prices are down to $2.99 per gallon. A good thing to be sure, but strong evidence the fuel industry was artificially inflating the price of gasoline for the past 10 years.

Gasoline is the cheapest it has been since before Hurricane Katrina, I think.

A couple of weeks ago I spoke to a very sharp mathematician employed by a Wall Street financial firm. In his words: " The changes in regulations after the financial collapse have been purely cosmetic." Also, HSBC was recently penalized to the tune of nearly two billion dollars for turning a blind eye to their money laundering of drug cartel loot, Iranian and other sanctioned terrorist organizations. All of the pro-capitalists on this forum and elsewhere are not being pollyannas about this illegal financial activity, they are outright liars. The illegal drug industry saved American banks from going under completely- and for a number of international banks , it's their core business.

Based upon what?The US economy was doing quite well without the Federal Reserve.After the Federal Reserve the US entered into WWI, WWII, Cold War, Korean War, the Depression, all traceable to US economics policies.Recent booms and busts include S&L in the 80s, the stock market in 87 and late nineties, housing bubble and now unlimited national debt. This is the best?

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"We witnessed in the GDR and in the entire socialist system that an economy which was no longer competitive was denying people prosperity and ultimately leading to great instability," she said."